(NaturalNews) It seems almost too absurd to be true, but in the land of leviathan government, where the layers of bureaucracy are so intertwined it is impossible to navigate them, comes the revelation that the U.S. government has now taken to fining companies for not using a required product that doesn't even exist.

The substance is made from wood chips and inedible parts of corn cobs. The government, in its infinite wisdom, required oil refineries to blend in 6.6 million gallons of cellulosic biofuel into gasoline and diesel fuel last year, and 8.65 million gallons this year. But since there is no cellulosic biofuel to be had, oil companies can expect to have to pay more in fines in 2012.

And you wonder why, despite falling demand, you are still paying three bucks a gallon for gas (and more for diesel).

Fining oil companies for not using a product they can't even get "belies logic," Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, said regarding the 2011 cellulosic biofuel quota. Bumping it up in 2012 makes even less sense, he told the Times.

The absurdity of it all gets even worse. It's bad enough knowing that the Environmental Protection Agency is fining oil refineries for failing to use a biofuel that doesn't exist; the agency is actually being lenient in applying the standards of the law, which are contained in Energy Independence and Security Act of 2007.

The aim of the law was noble enough - to increase U.S. energy security by reducing our demand for oil from volatile regimes overseas and in South America, while reducing emissions. "The Energy Independence and Security Act (P.L. 110-140, H.R. 6) is an omnibus energy policy law that consists mainly of provisions designed to increase energy efficiency and the availability of renewable energy," says a summary.

But in calling for an increase in the use of "renewable energy" technology that only exists in a laboratory, Washington's bureaucracy has once again placed unreasonable demands on private industry, to the detriment of those companies and, of course, to consumers as well, who will be forced to pay for the lunacy through higher prices.

"From a taxpayer/consumer standpoint, it doesn't seem to make a lot of sense that we would require blenders to pay fines or fees or whatever for stuff that literally isn't available," Dennis V. McGinn, a retired vice admiral who serves on the American Council on Renewable Energy, told the Times.

And while biofuel researchers say the technology is advancing, it's far from being ready for commercial production, especially on the scale demanded by the 2007 law. Naturally, the EPA doesn't see anything wrong with the law's unreasonable demands. Cathy Milbourn, a spokeswoman for the agency, told the Times the 2012 cellulosic biofuel quota of 8.65 million gallons is "reasonably attainable" - even though the biofuel industry says it's not. Who do you believe?

The final insult to the beleaguered consumer is this: conflicting U.S. energy policy which, in the end, costs all of us in lost treasure and security.

In 2007, Congress and the Bush administration seemed legitimately concerned with energy security and passed a law to address that, though one with impossible provisions. By 2011, Americans were saddled with an Obama administration that says it wants energy security, but then cancels energy infrastructure projects like the Keystone XL pipeline.

In the end, the consumer is stuck in the middle, needlessly paying higher prices for fuels that don't exist in a punitive regulatory environment that robs us of the resources needed for innovation. Welcome to the modern dysfunctional American leviathan state.

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